An Insight to FLA Returns under Foreign Exchange Management Act, 1999

An Insight to FLA Returns under Foreign Exchange Management Act, 1999

Introduction:

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India. It was passed in the winter session of Parliament in 1999, replacing the Foreign Exchange Regulation Act (FERA). Reserve Bank of India (‘RBI’), which is the Apex Bank, governs FEMA and Regulations made there under.

In India, Foreign Direct Investment (‘FDI’) inflows have been witnessing increase every year. Similarly, Indian companies are going global by investing abroad in the recent past.

The importance of FEMA compliances is indispensable considering the fact there are penal consequences in case of non-compliances. The purpose of this article is to inculcate basic knowledge on Annual Compliances specified under FEMA for Indian Companies having FDI and for Indian entities having investments in overseas Joint Venture (‘JV’) and/or Wholly Owned Subsidiary (‘WOS’). The said compliances are detailed hereunder:

What is Annual Return on Foreign Liabilities and Assets?

In order to capture the statistics relating to FDI in a more comprehensive manner as also to align it with international best practices, the RBI has introduced the requirement to file Annual Return on Foreign Liabilities and Assets (‘FLA Return’).

Annual return on Foreign Liabilities and Assets has been notified under FEMA 1999. Return to be filed under A.P. (DIR Series) Circular No.145 dated June 18, 2014 and submitted to the Department of Statistics and Information Management, RBI, Mumbai.

Investment made by Non Resident Indians (‘NRI’) on non-repatriation basis as per schedule 4 of the FDI Regulations is not considered as FDI and hence, the same may be considered as domestic investment in the FLA Return.

If the Indian company does not have any outstanding investment in respect of FDI and as on end of the reporting year, the Company need not submit the FLA Return. Similarly, if the Indian company has not ‘received any fresh FDI and in the latest year but the company has outstanding FDI and then that company is still required to submit the FLA Return every year by 15 July.

Partnership firms, Branches or Trustees which are having FDI as on end of the reporting year, then the same are also required to file excel based FLA Return. These persons should send a request mail to get a dummy CIN number which will enable them to file the Excel based FLA Return. If any entity has already got the dummy CIN number from the previous year, they should use the same CIN number in the subsequent years also.

Applicability:

 It is required to be submitted mandatorily by all the India resident companies which have received FDI and/ or made ODI in any of the previous year(s), including current year i.e. who holds foreign assets or liabilities in their financial statements as on 31 March.

Due Date: 

FLA Return is mandatory under FEMA 1999 and companies are required to submit the same based on audited/ unaudited account on or before July 15 every year through official email id of any authorized person of company like CFO, Director, and Company Secretary at fla@rbi.org.in

Where return is filed with unaudited/provision balance sheet than subsequently, once the accounts gets audited and there are revisions from the provisional information submitted by the Indian Company, then the Indian

Company is supposed to submit the revised FLA return based on audited accounts by end of September.

Format:

The FLA Return has to be submitted in excel based format, which has inbuilt checks and validations. The Indian company which is under an obligation to file the FLA Return needs to download Excels based utility from the RBI website. After filling in the requisite details, the Indian Company can file the FLA Return by e-mailing the same to the RBI at fla@rbi.org.in

The latest format of FLA Return is available on RBI’s web site at the following link: https://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx

Non-compliance:

Non-filing of FLA Return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA. Hence, these compliances need to be adhered in a timely manner.

Disclaimer:

The information contained in this write up is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Authors recommend that professional advice is sought before taking any action on specific issues.

This article has been shared by Harsha Ramnani. She can be reached at harsha.ramnani@sba-ca.com

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Decoding of Union Budget 2015-16 for Common Man: Is it really SABKA Budget APNA Budget?

Introduction:

Union Budget 2015-16 is promoted like, it is fulfilling wishes of every common people. The Government has presented this budget like “SABKA Budget, APNA Budget” and explained that, wishes of everyone like householder, farmer, youth, senior citizen, and entrepreneur will be fulfilled by this. The Government has projected the Union Budget 2015 as step towards attaining the ultimate goal of accomplishing Achche Din for Aam Aadmi (Common man) of India.

A lot was expected from the Honorable Finance Minister when he rose to present the budget of the Union for the year 2015-16 on February 28, 2015. Expectations were riding high and it was believed that budget will focus on growth and investments and will provide assistance to common man from inflation, increase in tax slabs was highly expected.

However, there is no alteration in the income tax slabs, only some additional deductions are been introduced in the budget. Now, everyone is thinking that whether it is really APNA Budget or shaking pockets of common man to balance the fiscal deficit and losses of the country.

Sight of Modi’s Government towards Budget:

In line with a goal of nation building, the Government of India has also been committed to start up various policies to uplift the economic structure of India.

Pitching for ‘Big Bang’ reforms, the Government is trying to improve business environment by making regulations and taxes less onerous to help push growth to 8.1-8.5 % next fiscal and to double digits in the coming years. India has reached a sweet spot and there is scope for Big Bang reforms now. Many new initiatives were announced and the thrust was majorly on Infra, Make in India and job creation. 

Is there something for Aam Aadmi?

Following are the key features for common man from the Union Budget 2015:

1.     Increment in  threshold for deduction in respect of health insurance premium

The continuously rising cost of medical expenditure has now caught the eye of the Government, as it doled out an increased tax benefit under section 80D. Section 80D i.e. Health Insurance premium increased to Rs. 25000 (Previously it was Rs.15000). In case of Senior citizen limit increased to Rs.30000 (Previously it was Rs.20000).

Furthermore, One good thing is that most of the very senior citizen who are above 80 years was unable to get benefit of this section because Insurance Company not cover their insurance so for those Senior Citizen who are not covered by health insurance to be allowed deduction of Rs.30000 towards medical expenditures.

2.     Interest from Sukanaya Samriddhi Scheme to be tax free

Sukanya Samriddhi Scheme was introduced in January 15 by the Hon’ble Prime Minister in his endeavor towards Beti Bachao Beti Padhao. The scheme was aimed at encouraging savings for a girl child’s education and marriage. At present, investment under Sukanya Samriddhi Scheme is already eligible for deduction under Section 80C.

It is now proposed that all payments to be made to recipients, including interest payments and withdrawals from the account under the scheme, would be fully exempt. This amendment is proposed to be effective retrospectively from 1 April 2015.

1.     80DDB: Easing the norms for claiming deduction on treatment of specified diseases

It is proposed to remove the requirement of obtaining a certificate from a Government doctor and now allows the deduction to the taxpayer on the basis of prescription, from a specialist doctor under section 80DDB.

The corresponding limit has also been increased to Rs. 80,000 for very senior citizens, while the overall ceiling for others categories remains unchanged.

2.     80DD: Increase in limits for deduction for disable persons

In view of the rising cost of medical care and special needs of a disabled person, it is proposed to amend section 80DD and section 80U so as to raise the limit of deduction in respect of a person with a disability from Rs. 50,000 to Rs. 75,000.

It is also proposed to raise the limit of deduction in respect of a person with severe disability from Rs. 1 lakh to Rs. 1.25 lakhs.

3.     Higher threshold for deduction towards contribution to pension funds

With an agenda to promote social security measures and to bring the existing provision in line with the recently increased overall limit of Rs. 150,000, the deduction for contribution to certain pension funds under section 80CCC has been increased to Rs. 150,000 from present Rs. 100,000.

Also, an additional deduction under section 80CCD to the extent of Rs. 50,000 has been introduced for contributions under the National Pension Scheme.

Dear common man you have to spend more for your pension to get tax saving today. Government is much concerned about retirement of peoples.

4.     Relaxation in TAN requirements

The burdensome requirement of obtaining/quoting a TAN by an individual (not liable to audit under section 44AB) in respect of his one-time transactions has been proposed to be discontinued in respect of notified deductors or collectors.

This shall reduce procedural requirements on part of an individual and ease his burden. Similar provisions already exist under section 194-IA in respect of transactions for purchases of immovable property from an Indian resident.

5.     Wealth tax abolished

The waning law on taxation of wealth has been proposed to be abolished. The Finance Minister has mentioned that the collection of wealth tax is more costly affair than collecting it. The detail furnished under the Return of Wealth still seems useful and so the Government has proposed to include the disclosure of details of assets as part of the Income Tax Return.

6.     Increase in surcharge on the super-rich

The revenue loss on the abolition of the Wealth Tax Act has been proposed to be compensated with an increased surcharge on the super-rich taxpayer (i.e. a taxpayer having a total income in excess of Rs. 1 crore). Super-rich taxpayers shall be liable to an increased surcharge of 12% in the event that their total income exceeds Rs. 1 crore, which shall be subject to the marginal relief available.

7.     Increase in travel allowance

The long due increment in the monthly travel allowance has now finally materialized. In order to commensurate with the increased costs of transportation, it is now proposed to be double the original transport allowance and it shall stand at Rs. 1,600 per month.

Heartily thanks to finance minister for looking towards these old limits but this joy would be complete only if they revised all limits i.e. Children education allowance, Uniform allowance, Hostel allowance etc. May be this items will be considered in next budget.

8.     Exempted Income:

Few items are listed in Section-10 Exempt Income. Amount received from maturity of Sukanya Scheme, Swacch Bharat abhiyan, Clean Ganga fund are not liable to tax.

Position of Aam Aadmi after Budget:

Service tax rate is proposed to increase from 12.36% to 14%.Further an enabling provision is made to empower the Central Government to impose a Swatch Bharat cess on all or certain taxable services at a rate of 2%.

Needless to say it will impact the middle class as essential services will become costlier.  An overall situation of Aam Aadmi is like:

·         How we give good education to our kids, as it now costs more.

·         Welcome to obese India, gym costs more.

·         IT enabled India is not for us, as internet and mobile cost more.

·         Debit and credit card costs more.

·         Trying to buy a house, forget about it, because you don’t have liquidity as your funds are stuck with deduction investment.

Whether this Budget is good for Aam Aadmi?

The FM promised 24-hour power, clean drinking water, toilets for all homes, at least one job for each household, connecting all habitations by all weather roads, electrifying all villages, good health and education facilities in every town and village. The deadline for these goals in line with the 'sabka saath, sabka vikas' motto of the Modi government is 2022, which is the 75th year of India's independence and three years after the term of the current government ends.

On the other hand, proposed raise in service tax will increase in cost to consumer and which will thereby lead the pockets to cry. An increase in service tax from 12% to 14% will make everything from haircuts and telephone bills to eating out and watching a cricket match a little bit more expensive. Therefore it seems not so much good for the middle class people, since exemption limits remain same no increase in disposable income but expenses on movies, hotels, travel, legal, banking, restaurants etc all will increase.

Is shaking pocket of common man will help to MAKE in INDIA:

It may seem towards a “Make In India” on a corporate note, which indeed it is, but it surely is a “Shaking pocket of ‘Mango people’ (Aam Aadmi)” for the common man. From the common man perspective, I stand confused between a Thumbs Up and Thumbs Down, especially with respect to the basic and day-to-day amenities.

No doubt, deductions have been given, certain rate of taxes too have gone down, many proposals favoring the SMEs, Startups, Senior Citizens, SC/STs and the under-privileged have come up. Skill development, Education, Welfare and Health sector have also been considered, but these all will impact in a long-run.

From immediate impact on his/her finance, the common man stands disturbed on his day-to-day expenditure. The common man was expecting a rise in the tax exemption limits, so it was a disappointment to see the limits remain unchanged.  Although the above changes will help an individual reduce his tax liability, but it doesn’t increase his disposable income.

Yes, it is SABKA Budget but not APNA budget for everyone:

The budget was quiet a disappointment to the common man as the Finance Minister did not increase the Income Tax slab rate. Adding to this, the service tax rate was hiked from 12.36% to 14%. Wealth tax was abolished and an additional 2% surcharge was imposed on super rich.

Overall, with most services that we shall have to undertake or products we shall have to buy, we shall have to shelve more towards tax, this stands to pro Aam Aadmi. Luxury is now luxuriously available. It now says “Think before you Spend”.

Great things indeed come in small packages. Introduction of tax-free infra bonds, no tax on initial investment, interest and maturity proceeds for Sukanya Samriddhi scheme and doubling of transport allowance will make the common man plough more money in to saving.

So over all it’s a good budget from the point of view of government. It will provide strength to government to recover its losses & fiscal deficit. Without getting suffered no one ever got a success. So these stringent amendments are necessary to recover our economy. Therefore we can say that Yes “It is SABKA Budget, but probably not APNA budget”.

Disclaimer:

The information contained in this write up is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Authors recommend that professional advice is sought before taking any action on specific issues.

This Article has been shared by CA Harsha Ramnani. She can be reached at harsha.ramnani@sba-ca.com

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One more chance to Defaulters Amnesty Scheme-2015 under Rajasthan VAT Act, 2003

One more chance to Defaulters

Amnesty Scheme-2015 under Rajasthan VAT Act, 2003

Introduction:

The State Government has notifies the Amnesty Scheme, 2015 for the waiver of interest and penalty in public interest with the date of notification i.e. February 9, 2015 till 31st March 2015. This scheme has been notified under Section 51A of the Rajasthan Value Added Tax Act, 2003.

Objective of Scheme:

Objective of said scheme is of encouraging both registered and unregistered dealers to voluntarily disclose their outstanding tax dues. The scheme has been summarized as under:

Applicability of the Scheme:

This scheme will be applicable to the dealer against whom the amount of total outstanding demand under the given act is up to Rupees 5 Crore:

·         The Rajasthan Sales Tax Act, 1954

·         The Rajasthan Sales Tax Act, 1994

·         The Rajasthan Value Added Tax Act, 2003

·         The Central Sales Tax Act, 1956

And further, it is also applicable where the demand has been created on or before 31^st March 2011 or the demand is under dispute before 31^st December, 2013 pending before any Court, Tax Board or Appellate Authority.

Subject to above conditions, this scheme is also applicable where:

·         The dealer/person has been permitted to pay the demand in installments become due at the timing of filing of the application under scheme, have been deposited by such dealer, or,

·         The case of prosecution has been filed by the department under 67(1) (d) of the Rajasthan Value Added Tax Act, 2003 or any other provision of same Act.

Benefits by the Scheme:

Procedure for availing the benefit of the Scheme:

·         Application in Form AS-I to assessing authority by applicant, along with details of deposition of tax/penalty or interest amount, and proof of case withdrawal, if any, up to 31/03/2015.

·         Assessing Authority verify the facts under application, shall complete the form AS-II.

·         Assessing Authority shall also reduce the demand of penalty/interest.

·         Where there is a case of prosecution under section 67(1) (d) of Rajasthan Value Added Tax, 2003 or other provision of same act, Assessing Authority shall proceed to withdraw the case from the court.

·         Assessing Authority shall forward the copy of form AS-II to concerned Deputy Commissioner (Administration) and Commissioner, where amount of waiver is more than 5 Lacs.

Conclusion:

The State Government has taken a step in public interest for the tax payers. Through the scheme, the person will be able to have immunity from interest, penalties and other proceedings on compliance with all the requirements.

Disclaimer:

The information contained in this write up is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Authors recommend that professional advice is sought before taking any action on specific issues.

This article has been shared by CA Harsha Ramnani. she can be reached at harsha.ramnani01@gmail.com

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Plan your Income tax: It’s Right Time for Salaried Assesses

It’s Right Time:

It's just a few months to the end of the current financial year 2014-15. Now, it's time to plan and start investing in instruments that qualify for a rebate in Income Tax. There are certain investments and expenses that are exempt from income tax under the Income Tax Act 1961. Assesses should plan their investment strategies carefully in order to get a good deal in terms savings on income tax and returns from the investments. Before briefing available options for rebate in tax, below are the broad changes which are applicable from Assessment year 2015-16:

Changes at a glance:

1.     Taxable Income eligible for full exemption from income tax is increased from Rs. 2 Lacs to Rs. 2.5 Lacs

2.     Additional deduction of Rs. 50,000 under Section 80 C, CCC, CCD(1):

3.     Income Tax exemption on Interest paid on housing loan under Section 24 of the Income Tax Act increased from Rs. 1.5 Lacs to Rs. 2 Lacs

Now, below are some options to help you to reduce your tax liability:

Utilize Section 80C:

This section of the Income Tax Act allows income tax exemptions for individuals on specified instruments. Section 80C offers a maximum deduction of up to Rs. 1.50 Lacs. Investors can invest up to Rs 1.50 Lacs in one or more of the specified instruments to avail a tax rebate under Section 80C. Utilize this section to the fullest by investing in any of the available investment options. A few of the popular options are as follows:

•     Public Provident Fund
•     Life Insurance Premium
•     National Savings Certificate
•     Equity Linked Savings Scheme
•     5 year fixed deposits with banks and post office
•     Tuition fees paid for children's education, up to a maximum of 2 children

Options beyond 80C:

If you have exhausted your limit of Rs. 1.50 Lacs under section 80C, here are a few more options:

1.   Section 80D: Medi-claim Deduction

You can claim tax benefits on a medical insurance scheme as well. This rebate comes under Section 80D and enables you to claim a rebate on the money paid to buy a medi-claim policy by any mode other than by cash. Deduction of Rs. 15,000 for medical insurance of self, spouse and dependent children and Rs. 20,000 for medical insurance of parents above 60 years is eligible for a tax exemption. Further, From AY 2013-14, within the existing limit a deduction of up to Rs. 5,000 for preventive health check-up is available.

 

2.   Section 80E: Deduction in respect of Interest on Loan for Higher Studies

Deduction in respect of interest on loan taken for pursuing higher education is also available. The deduction is also available for the purpose of higher education of a relative.

 

3.   Section 80G: Deduction in respect of Various Donations

The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% as provided in Sec. 80G

 

4.   Section 80GG: Deduction in respect of House Rent Paid

Are you paying rent, yet not receiving any HRA from your company? In this case, the least of the following could be claimed under Section 80GG:

Deduction available is the least of:

1. Rent paid less 10% of total income
2. Rs. 2000/- per month i.e. Maximum Deduction available is 24,000/-
3. 25% of total income,

This deduction will however not be allowed, if you, your spouse or minor child owns a residential accommodation in the location where you reside or perform office duties.

5.   Section 80 TTA: Interest on saving account:

Deduction from gross total income in respect of any Income by way of Interest on Savings account is available under this section. Deduction from gross total income of an individual or HUF, up to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 01.04.2012 (Assessment Year 2013-14).

Other Available Exemptions on Allowances:

1. House Rent Allowance: (Section 10(13A)

If HRA forms part of your salary, then the minimum of the following three is available as exemption:

• The actual HRA received from your employer
• The actual rent paid by you for the house, minus 10 per cent of your salary (this includes basic  Plus dearness allowance, if any)
• 50 per cent of your basic salary (for a metro) or 40 per cent of your basic salary (for non-metro).

2. Tax Saving from Home Loans: (Section 24)

Use your home loan efficiently to save more tax. The principal component of your loan, is included under Section 80C, offering a deduction up to Rs. 1.50 Lacs. The interest portion offers a deduction up to Rs. 2 Lacs (limit amended from A.Y 2015-16) separately under Section 24.

3.  Medical Reimbursement: Clause (v) of the Proviso to Section 17 (2)

Salaried individuals can available a deduction of up to Rs 15,000 per year against medical reimbursement. This deduction can be claimed if the employer pays medical reimbursement as a component of salary.

Please note that Medical Expense Reimbursement of Rs. 15,000 is over and above the deduction under Section 80D of the Income Tax Act available for Medical / Health Insurance Premium – Mediclaim Premium and this deduction is allowed subject to providing proof of medical expenses.

4. Leave Travel Allowance: Sec. 10(5)

Salaried persons can avail an income tax deduction on travel expenses (family travel expenses can also be covered if the family travels along with the taxpayer).Use your Leave Travel Allowance for your holidays, which is available twice in a block of four years. In case you have been unable to claim the benefit in a particular four- year block, you could now carry forward one journey to the succeeding block and claim it in the first calendar year of that block. Thus, you may be eligible for three exemptions in that block.

Points to be remembered:

 

1.     Invest Some Quality Time

Before investing your money, you need to invest your time. You need to take some quality time to understand the various tax saving options and compare their benefits and limitations. Therefore, it is important to start your tax planning well before 31st March, and to file your returns before the 31st of July each year.

 

2.     Check for Future Commitments

Some tax saving options like NSC or ELSS need only onetime investment. Some other tax saving options like PPF, ULIPs need periodical investments year after year. You need to be careful in choosing a tax saving scheme where you need to commit for periodical future payments. You need to check on a few things like; do you need such a future commitment? Will you be able to meet the future commitments at ease? The law may change and you may not get any tax exemption for your future payments. Would you consider the scheme irrespective of tax benefit for the future payments?

3.     Prevent Excess deduction & Documentation

Give your employer details of loans and tax saving investments beforehand, to prevent any excess deduction. Further, we should check the Form 16 received at the end of each year from your employer thoroughly.

 

4.     Changed Your Job? It’s time to Redo Your Tax Plan

Did you switch your job in the middle of the financial year? Then you need to redo your tax plan with consolidating the income from both the companies. It is advisable to inform the new company about the income during the particular financial year from the old company. So that your new company will deduct the right amount of TDS.

A Final Word:

Keep in mind the above points, to avoid the hassles of last minute tax planning. With proper tax planning you can reduce your tax liability, save more, invest better and become wealthier.

Disclaimer:

The information contained in this write up is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Authors recommend that professional advice is sought before taking any action on specific issues.

Author of this article is Harsha Ramnani. She is practicing Chartered Accountant. She can be reached at harsha.ramnani01@gmail.com

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INCOME TAX OMBUDSMAN

INCOME TAX OMBUDSMAN

WAY TO SEEK REDRESSAL OF YOUR GRIEVANCES

Have you been in trouble to get your refund from the tax authorities? Or been harassed time and again for an income-tax scrutiny year after year? Is there a permanent account number you have been waiting for years? If yes, there’s a way to get your grievances resolved.

Income Tax Ombudsman:

An ombudsman is a government official charged with representing the interests of the public by investigating and addressing complaints reported by individual citizens. The government has appointed former I-T officials or officials from the Indian Revenue Service as income-tax ombudsman. These officers are independent of the jurisdiction of the income-tax department and hence, operate as an independent arbiter.

Objective of Tax Ombudsman:

The Ombudsman is governed by, and has to act within, the framework of the Income Tax Ombudsman Guidelines, 2006 (“Guidelines”). The Ombudsman is an independent body and comprises of former Income Tax officials or officials from the Indian Revenue Service. These officers have been empowered to settle grievances and take up matters to the highest authority, with the sole aim of resolving it. They act as an arbitrator and are independent of the jurisdiction of the income-tax department.

Grounds for filing Complaints to Ombudsman:

The ombudsman can help you resolve issues linked to delay of tax refunds, such as if your refund came without a cheque or refund voucher, delay in updation of tax demand registers due to which tax-assessee was harassed etc.  Illustrative list is as below:

ü  Delay or discrepancy in tax refunds.

ü  Allotment of PAN and issues of PAN Card

ü  Impolite behavior of tax officials.

ü  Interest waiver.

ü  Seizure of account books by department i.e. issues relating to release of books of accounts and asset after the completion of the proceedings.

ü  Scrutiny selection procedure and failure to communicate reasons thereof.

ü  Erroneous demand matters/assets attachments causing harassment to assessee.

ü  Cases related to interest waiver, rectification applications, appeal effects etc.

ü  Issues relating to allotment of Permanent Account Number.

ü  Non credit of tax paid, including tax deducted at source.

ü  Non-acknowledgement of letters or documents sent to the Department.

ü  Conduct of proceedings beyond working hours at the IT offices.

ü  Matters concerning circulars of Central Board of Direct Taxes about the Income Tax Administration.

ü  Other administrative matters that have been violated.

ü  For further details, please refer to clause 9 of the Guidelines.

Time limit for complaint to Ombudsman:

No complaint can be made:

     a)       12 months after the reply was received from the superior authority;

    b)       13 months after the representation was submitted to the superior authority but no reply was received.

Who can file a complaint?

The ombudsman’s doors are open to anyone facing a problem related to issues listed in clause 9 of the Guidelines but the Ombudsman will not take cognizance of the complaint if it has been the subject matter of:

     ·         An earlier settlement made by the Ombudsman

OR

     ·         An appeal, revision, reference or writ before any Income-tax authority or a court of law. 

How are complaints resolved?

The ombudsman mediates between the income-tax department and the tax-payer or tax assessee and seeks to settle the issue and pass a decision also called ‘award’, based on the income-tax rules and guidelines.

PROCESS TO ADDRESS GRIEVANCES THROUGH OMBUDSMAN

Step 1:-No direct complaint to Ombudsman:

Before filing a complaint to Ombudsman, one needs to write a letter to the Income Tax Officer superior than the one complained against and if: -

    Ø  Such authority rejects the complaint

    Ø  The complainant does not receive any reply within one month or

    Ø  The complainant is not satisfied with the reply given to him by such authority then

Complaint can be made to ombudsman within one year of receipt of reply or if no reply is received, within 13 months of submission of letter.

Step 2:-Submission of Documents and Details to Ombudsman

There is no set format for addressing the complaint to the ombudsman. However, your complaint must be in writing and should mention the following:

     ·         Your name, address and PAN

     ·         Facts and details about the grievance- date wise complaints filed, responses, and the time          gap involved etc.

     ·         Income-tax authority against who you are complaining

     ·         Copies of the letter of the first complain made to the income-tax authorities and its result.

     ·         Other documents such as relevant income proof supporting your claim and complaint.

     ·         The relief requested from the Ombudsman.

The application can be filed through personal submission / post / E-Mail. However, when you are sending an electronic complaint, you have to sign the same in the ombudsman’s office “at the earliest opportunity.” If, the complainant is represented by an authorized representative then, power of attorney to represent the complainant has to be filed before the Ombudsman. Three sets of the documents are required to be filed.

Step 3:-Resolving of Complaints

The Ombudsman acts as an intermediary between the Income Tax Department and the tax payer. It tries to resolve the issue by hastening the process. Ombudsman will try to solve the problem by making settlement between the Complainant and the concerned authorities. If the complaint is not settled by agreement, he shall pass an Award. The award mentioned above shall consist of 2 components:

     •         Directions to the concerned Income Tax Authority for performance of its obligations

   •         A token compensation amount not exceeding Rs 1000/- for the loss suffered by the complainant.

Decision of the Ombudsman:

All decisions taken by ombudsman would be in line with the prevailing tax laws and only if the submitted documents are deemed fit. The decision of the Ombudsman thus has to be abided by the Income Tax Department and the tax payer.

Once the Ombudsman decision is passed, tax payers need to make known their acceptance of the “full and final settlement” within 15 days of receiving the letter stating the ombudsman’s decision, or as per the time frame mentioned in the letter. If one fails to do so, the “award proposed shall lapse and be of no effect”.

OMBUDSMAN OFFICES

Currently there are 12 offices for ombudsman, located in Mumbai, Pune, New Delhi, Ahemdabad, Chennai, Bangalore, Kolkata, Hyderabad, Kanpur, Chandigarh, Bhopal and Kochi. To locate your nearest Ombudsman click on the link given below:

http://www.incometaxindiapr.gov.in/incometaxindiacr/home.jsp?p1=ombudsman_contacts

Complaints addressed to the Ombudsman could be sent to the nearest Ombudsman Office. For Rajasthan, the office for Ombudsman grievances is Ahemdabad, Address: Room No.104, 1^st Floor, Nature View Bldg, Ashram Road, Ahemdabad. Contact person is Dr. Kalyan Chaudhary, Income Tax Ombudsman. Contact Details: Ph.No. 079-26581495, Fax: 26581376, Email: ahmd-itombuds .

Your Complaint Helps Other:

After you complain to the ombudsman, not only will it benefit you, but also benefit others. The ombudsman is asked to make a note of the problem areas for taxpayers, which is then sent to the Central Board of Direct Taxes (CBDT) and the Union Finance Ministry. The information is periodically submitted to the Central Board of Direct Taxes and the Finance Ministry. Ombudsman also reports to the CBDT about the officials found to have defaulted in their regular duties.

Thus, approaching the ombudsman can help the government and authorities better our tax process.

Disclaimer:

The information contained in this write up is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. I recommend that professional advice is sought before taking any action on specific issues.

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